South Africa closed 2021 with the best stock share in a decade

Despite economic hardships experienced by multiple sectors within the economy, the South African stock market closed 2021 with the most significant and profitable margins in more than a decade, set on the back of a weakened rand. 

The final trading session in 2021 closed with the FTSE/JSE Africa All Share Index slipping by a marginal decline of 0.1% and reducing the average annual advance by 24%. However, the benchmark closed at an all-time high on subsequent days producing an almost 20% overall growth up from a decline of 7% in 2020. 

We take a closer look at the key players and the significance this has on the growth of our investment portfolios.

Stock Market vs Economy

South Africa's economy took a hard knock during the pandemic and reflects the overall GDP of the country. Whereas the stock market is a collection of exchanges in which investors can buy and sell shares of companies and other listed security stock. 

The Johannesburg Stock Exchange has had a successful run this year which is reflective of the optimism expressed over a global bounce-back as well as increasing demand for commodities following lockdown restrictions.

Inflation rates remaining within the control range of central banks are keeping investors' interests peaked since policymakers within the governing framework opt to keep rates on a steady course.

Key Stock Drivers in the market

Key winners on the stock market include the mining sector with industry giants such as Anglo American, BHP Group, and Sasol. These companies made major gains thanks to a steep increase in oil prices not experienced since 2009. This was aided by oil share prices dropping off following the initial lockdown period in April 2020 and spiking back to a more recognisable share following the easing of restrictions.

In terms of Index points, The luxury group Richemont was perhaps the largest driver within the retail sector with a growth record of a whopping 84%. This was spurred by a resilient luxury goods market that continued to drive sales and investments throughout the pandemic combined with an optimistic projection for 2022.

The dominance of international stock listed on the JSE

The major takeaway from these gains comes from a clear understanding that key drivers are internationally recognised companies listed on the Johannesburg Stock Exchange. As such, the stock market resembles similar takeaways of more developed nations than our African peers with emerging markets.

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